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Soft Infrastructure and the Location Choice of Multinational Firms:Evidence from Japanese Investment in the United States in the 1980s

Author

Listed:
  • Shuichiro Nishioka

    (West Virginia University)

  • Eric Olson

    (The University of Tulsa)

  • Haoyu Wang

    (West Virginia University)

Abstract

We examine whether culture-specific educational infrastructure influenced the location decisions of multinational enterprises by analyzing Japanese foreign direct investment (FDI) in the United States during the 1980s. Using the quasi-natural experiment of politically-driven Japanese FDI following Reagan-era trade tensions, we test whether pre-existing Japanese Studies programs in U.S. universities predict subsequent Japanese investment across 722 commuting zones. We find that zones with Japanese Studies programs in 1980 were 21-29% more likely to receive new Japanese manufacturing investment by 1992, controlling for traditional determinants likemanufacturing infrastructure, agglomeration, and market access. Our results suggest that "soft infrastructure"—culture-specific human capital pipelines—represents an overlooked location advantage that complements traditional "hard" infrastructure in attracting FDI. These findings have implications for understanding how regions can strategically develop cultural competencies to attract foreign investment.

Suggested Citation

  • Shuichiro Nishioka & Eric Olson & Haoyu Wang, "undated". "Soft Infrastructure and the Location Choice of Multinational Firms:Evidence from Japanese Investment in the United States in the 1980s," Working Papers 25-02, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:25-02
    as

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    File URL: https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=1253&context=econ_working-papers
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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